Richter v. Prairie Farms Dairy, Inc.

• Decision Date: 19 May 2016
• Docket Number: No. 119518.,119518.
• Citation: 402 Ill.Dec. 870,53 N.E.3d 1
• Parties: Michael RICHTER et al., Appellees, v. PRAIRIE FARMS DAIRY, INC., Appellant.
• Court: Illinois Supreme Court

53 N.E.3d 1
402 Ill.Dec. 870

Michael RICHTER et al., Appellees
v.
PRAIRIE FARMS DAIRY, INC., Appellant.

No. 119518.

Supreme Court of Illinois.

May 19, 2016.

53 N.E.3d 4

Donald K. Schoemaker and Andrew J. Tessman, of Greensfelder, Hemker & Gale, P.C., of Swansea, for appellant.

53 N.E.3d 5

Todd W. Sivia and Paul A. Marks, of Edwardsville, for appellees.

Ann C. Barron, of Heyl, Royster, Voelker & Allen, of Edwardsville, for amicus curiae Illinois Association of Defense Trial Counsel.

Leslie J. Rosen, of Chicago, for amicus curiae Illinois Trial Lawyers Association.

OPINION

Justice FREEMAN delivered the judgment of the court, with opinion.

402 Ill.Dec. 874

¶ 1 Following a voluntary dismissal, plaintiffs, Michael Richter and Denise Richter, doing business as Rich–Lane Farms, refiled their civil action against defendant, Prairie Farms Dairy, Inc. The circuit court of Macoupin County dismissed the refiled action pursuant to section 2–619 of the Code of Civil Procedure on the grounds of res judicata and the statute of limitations. 735 ILCS 5/2–619(a)(4), (a)(5) (West 2012). The appellate court reversed and remanded for further proceedings. 2015 IL App (4th) 140613, 393 Ill.Dec. 416, 34 N.E.3d 617. This court allowed defendant's petition for leave to appeal. Ill. S.Ct. R. 315 (eff. Jan. 1, 2015). We now affirm the judgment of the appellate court.

¶ 2 I. BACKGROUND

¶ 3 The pleadings alleged the following facts, which we accept as true in the context of a dismissal pursuant to section 2–619. See Board of Managers of the Village Centre Condominium Ass'n v. Wilmette Partners, 198 Ill.2d 132, 134, 260 Ill.Dec. 203, 760 N.E.2d 976 (2001). Plaintiffs are partners in the business of dairy farming. Defendant is an agricultural cooperative (see 805 ILCS 315/1 et seq. (West 2014)) in the business of producing and supplying dairy products. In August 1980, plaintiffs became members of defendant's cooperative, paid $15 for shares of defendant's common stock, and entered into a “Milk Marketing Agreement” with defendant. According to the agreement, plaintiffs would provide defendant with whole milk, which defendant would market and sell.

¶ 4 In April 2005, plaintiffs temporarily ceased milk production. However, plaintiffs had “hoped and expected to resume production within one year and [had] retained their stock of heifers to enable them to do so.” At that time, defendant's bylaws provided, in pertinent part, as follows:

“Section 8. Termination of Stock Interest. Any common stockholder who ceases to be a producer of agricultural products or who fails to patronize the association for one (1) fiscal year or who violates any provision of the Articles of Incorporation, the Bylaws, or a marketing agreement shall forfeit his right to own Common Stock in this association when evidence of such fact has been presented to the Board of Directors and upon passage of a resolution by the Board finding such to be the fact, immediately thereupon all the rights of such common stockholder shall cease * * *. Upon termination of membership, the Board shall redeem the outstanding Common Stock of the terminating member by payment to the member of the actual dollar consideration paid by the member for such Common Stock.”

Defendant became aware that plaintiffs temporarily ceased milk production no later than April 30, 2005.

¶ 5 In an October 2005 letter, defendant notified plaintiffs that it had terminated their agreement and plaintiffs' membership in the cooperative. The letter contained two alternative reasons for its actions: “You were no longer marketing milk as an active producer of Prairie Farms, as set forth in the By–Laws, at the end of the

402 Ill.Dec. 875

53 N.E.3d 6

fiscal year ending 9/30/05,” or “During the current fiscal year, there was a change in the way your membership was recorded in our books (name change, etc.).” Defendant tendered $15 to plaintiffs to redeem the shares of common stock, but plaintiffs rejected the payment.

¶ 6 A. Richter I

¶ 7 In October 2006, plaintiffs filed a three-count complaint against defendant in the circuit court of Madison County. Plaintiffs alleged that they sustained damages as a result of defendant's termination of their agreement and plaintiffs' membership in the cooperative. Count I sought shareholder remedies pursuant to section 12.56 of the Business Corporation Act of 1983 (Business Corporation Act) (805 ILCS 5/12.56 (West 2006) ). Based on defendant's alleged concealment, suppression, or omission of its interpretation of section 8 of its bylaws, count II alleged a claim pursuant to the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2006)), and count III alleged common-law fraud.

¶ 8 Defendant moved to dismiss the complaint, arguing that each count failed to state a claim upon which relief may be granted. See 735 ILCS 5/2–615 (West 2006). Defendant asked the circuit court to “dismiss Counts I through III of the Complaint with prejudice as a matter of law.”

¶ 9 On September 26, 2007, the circuit court ruled on defendant's motion in a written order, which stated in pertinent part:

“Defendant's Motion to Dismiss as to Counts I, II, and III are heard and argued.

Defendant's motion as to Count I is denied.

Defendant's Motion to Dismiss as to Counts II and III are granted.

Plaintiff[s] given leave to file amended complaint within 30 days.

Defendant given leave to file response to amended complaint within 30 days after plaintiff's filing of the same.

Defendant to answer Count I within 30 day[s] of [today's] order.”

On October 24, 2007, plaintiffs moved for an extension of time to file an amended complaint. On November 28, 2007, the circuit court granted plaintiffs an extension of 120 days. However, plaintiffs never filed an amended complaint. Instead, the case proceeded on plaintiffs' sole remaining claim for shareholder remedies pursuant to the Business Corporation Act as stated in count I.

¶ 10 In June 2011, the circuit court allowed plaintiffs' attorney to withdraw. The court stayed discovery deadlines and granted plaintiffs a continuance to find new counsel. In November 2011, plaintiffs' current attorney entered his appearance. Beginning in February 2012, plaintiffs sought extensions of time to comply with discovery requests. On July 13, 2012, the court granted plaintiffs 30 days to disclose additional experts. On August 13, 2012, plaintiffs moved for a two-week extension to disclose expert witnesses. On September 7, 2012, the court denied plaintiffs' request for a continuance. Plaintiffs then moved to voluntarily dismiss their lawsuit without prejudice, which the court granted pursuant to section 2–1009 of the Code of Civil Procedure (735 ILCS 5/2–1009 (West 2012) ).

¶ 11 B. Richter II

¶ 12 On September 6, 2013, plaintiffs filed their four-count complaint. Count I sought shareholder remedies. Based on defendant's alleged concealment, suppression, or omission of its interpretation of section 8 of its bylaws, count II alleged

402 Ill.Dec. 876

53 N.E.3d 7

misrepresentation, and count III alleged common-law fraud. Count IV alleged that defendant's directors or officers breached their fiduciary duty owed to plaintiffs. In December 2013, the circuit court of Madison County granted defendant's motion to transfer venue to Macoupin County.

¶ 13 In February 2014, defendant filed a combined motion to dismiss Richter II with prejudice. See 735 ILCS 5/2–619.1 (West 2012). Defendant contended, inter alia, that the doctrine of res judicata barred plaintiffs' claims in Richter II and, alternatively, that the five-year statute of limitations (see 735 ILCS 5/13–205 (West 2012) ) barred plaintiffs' claims for misrepresentation, fraud, and breach of fiduciary duty. In June 2014, following a hearing, the circuit court of Macoupin County granted defendant's motion to dismiss Richter II based on res judicata and the statute of limitations. 735 ILCS 5/2–619(a)(4), (a)(5) (West 2012).

¶ 14 Plaintiffs appealed. The appellate court held that the doctrine of res judicata did not bar plaintiffs from filing Richter II . The court recognized that one of the requirements for res judicata to apply was a final judgment on the merits. 2015 IL App (4th) 140613, ¶ 23, 393 Ill.Dec. 416, 34 N.E.3d 617. The court concluded that the circuit court's order dismissing the fraud counts in Richter I was not a final order. Id. ¶ 26. Thus, the doctrine of res judicata did not bar plaintiffs from refiling their action. Id. ¶ 36. The appellate court also held that the five-year statute of limitations (735 ILCS 5/13–205 (West 2012) ) did not bar Richter II . The court agreed with plaintiffs that the limitations savings statute (735 ILCS 5/13–217 (West 1994) ) permitted the refiled action. 2015 IL App (4th) 140613, ¶¶ 37–42, 393 Ill.Dec. 416, 34 N.E.3d 617. The appellate court...